Muni Bond ETFs Are Still a Crowd Favorite

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Despite the threat of a Federal Reserve rate hike, market observers do not predict a major pullback in munis, pointing to tax breaks that help munis offset the low yields on debt offered. For instance, MUB shows a 1.32% 30-day SEC yield and a 2.32% taxable equivalent 30-day SEC yield.

Additionally, John Miller, co-head of fixed income at Nuveen Asset Management, argued that the imbalance between demand and supply of munis is likely to keep prices elevated in the short term, even if the Fed raised rates.

“There’s a bit less fear around the implications of that,” Miller told the WSJ. “Even though munis are at low yields relative to history, they’re at high yields relative to the rest of the world.”

For more information on the munis market, visit our municipal bonds category.

iShares National AMT-Free Muni Bond ETF